Gradually then all at once – News Couple
COMMODITY

Gradually then all at once


So far in 2021, we should have already used that Hemingway-inspired phrase no fewer than a dozen times in these weekly columns. But now that the investment world is finally starting to realize that inflation is definitely not “temporary,” it’s time to use it again.

If you are not familiar with this phrase, it is inspired by Ernest Hemingway, who, when asked how he went bankrupt, replied “gradually and then suddenly.” Almost all bankruptcies are done this way – including the pending bankruptcy of the US government – but that is not what we are referring to again today.

Instead, this discussion is about gold prices and price action so far in 2021 and the coming weeks and months.

We have spent countless hours this year studying and explaining why gold prices have fallen from their 2020 highs. The initial drop from $2,100 was expected after the price rose from $1,500 to $2,100 in less than five months. But why did gold prices keep falling in 2021? After all, inflation-adjusted interest rates are at their lowest levels in decades, and these “real” rates have a historical relationship of about 95% with gold prices.

The answer can be found in Market Forecast. All markets are looking to the future, and the COMEX gold market in 2021 has focused on the Fed’s temporary inflation narrative. Why Comex Gold Ignores Current Real Prices? Because the usual buyers of Comex gold futures are convinced that real prices will soon rise towards zero as inflation subsides.

But what if inflation does not abate? What if it’s not “temporary”? What if, instead, the United States and the world were headed into a 1970s-style period of stagflation? What happens next?

image-20211026231559-2

Picture 20211026231559-3

Well, I’ll tell you what happens next / then. The “market” reacts gradually and then reacts all at once. Remember that graph in this article from two weeks ago?

image-20211026231559-4

There are signs that this shift in sentiment has already begun. After the classic double bottom at $1,720, Comex gold has maintained a steady uptrend and in recent days has started moving higher and across the key technical levels of its 50-day, 100-day and 200-day moving averages.

Picture 20211026231559-5

You should be sure to keep an eye on the prevailing financial press as well. Soon you’ll see more stories like these from Bloomberg: https://www.bloomberg.com/news/articles/2021-10-22/ex-goldcorp-chiefs-see-violent-bullion-runup-on-inflation

In this Bloomberg article, be sure to pick up quotes from two of the biggest names in Canadian mining – former Goldcorp co-chairs David Garofalo and Rob McEwen – each predicting that “investors will soon realize that global inflationary pressures are much less transitory and more intense than indicators suggest. Consumer prices adjusted by central bankers.

looks familiar?

And when investors “pick up”, the upward move in COMEX gold is likely to be gradual and then abrupt. Rob McEwen suggests a price as high as $3000/oz, but that’s not a potential initial target. Instead, look for Comex gold to eventually surpass its all-time high by 10% or so – just as it did in August 2020 when it peaked at $2,080 versus the September 2011 high of $1,920. That’s exactly what we put on the annual big broadcast when it was released back in January. While the timing may have been out, the message and rationale were not. 2021: Golden Journey

So, keep preparing for what’s to come. You’ve been given some time here in 2021 to add physical metal to your collection at surprisingly low prices. But this period of consolidation and false expectations is ending. Patient investors will soon be rewarded… gradually, then all at once.



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button